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Monthly Archives: October 2015

This is a funding request for a new research project focusing on South American real estate investment.

Our research project focuses on real estate markets and urban development in South America, considering commercial, residential and infrastructure sectors.

The main objective is to expose risks that are connected to the urban development context of each country including transparency of markets, urban equity and development regulations. The approach will provide investors and regulators and other researchers with a comprehensive picture of each country under study, from the high level of governance to the detail of the individual commercial, residential and infrastructure sectors. This research will provide a crucial analysis of the regulatory framework that underpins real estate markets and investments in a growing but little researched region of the Americas.

The project consists of four different stages:

An analysis of key real estate drivers and real estate market fundamentals. This part will include a novel ranking methodology that can capture the particularities of the region in terms of the diversity of its economies and the maturity of markets, and will help to identify and rank best countries for real estate investment in South America, grouping them into two major sectors: mature markets and emerging markets.

Particulars of commercial and residential real estate sectors; this part is an analysis of the particularities of these markets and the context in which investors and developers operate. The analysis includes residential and commercial real estate and looks at private sector development as well as government led schemes and public-private partnerships. In order to breach the gap between theory and practice, the project provides a number of case studies from key players in major cities. We will be collaborating with a range of experienced academics from the region who will provide the context of local development policies, legislation, valuation methods and taxation.

Infrastructure development. Real estate development is fundamentally dependent on quality infrastructure; primarily reliable power supplies, water and sanitation and good transport connects. Key infrastructure sectors include energy, water and sanitation and transport. Delivery of this infrastructure needs to be integrated with land use planning and have long-term future delivery strategies. Equally important is the integration with the protection of the region’s natural resources, eco-systems and biodiversity and strategies for local food production. Our research presents and analyses case studies in each classification group that was led by 5.1 government, 5.2 international investors, 5.3 Public Private Partnership 5.4 international development bank and discusses successes and failures.

The fourth part concentrates on investment barriers and the evaluation of real estate markets and future growth potential. This part will discuss various economic and financial barriers to real estate investment in Latin American markets. It also includes the presentation of results of an investor survey undertaken as parot fot the research. Following this classification this section will present suitable case studies to examine the applicability of those barriers in South America and to question what mechanisms, if any, are needed to solve them. Formal Barriers: including restrictions to capital accounts, legal barriers, taxation and costs including taxation of foreign owners.

Who is the project of interest to?

We believe that this research should be of interest to anyone investing or planning to invest in South America as well as government officials, regulators, practitioners, policymakers and developers.

Our classification of real estate markets considering country specific political and economic factors as well as real estate market fundamentals brings a completely new angle to evaluate effectiveness and sustainability of local urban development and market development and helps the distinguish between markets in Latin America.

Distinctive features of the research include:

Selection of 30 case studies from market practitioners to understand differences in markets and their development

historic evaluation of the emergence of real estate markets and planning in Latin America to understand origins of current planning regulations that affect urban development.

analysis of local culture and consumer behavioural preferences and their influence on commercial real estate assets such shopping centres, offices and hotels.

a full study of the residential sector according to different types of schemes and main actors/developers and the economic and political context they operate.

a sets of case studies on infrastructure development in South America according to main actors and organisations behind the schemes.

an evaluation formal and informal barriers that all selected countries present to international cross border investment.

Timing

The final results of this project will be available in December 2016

Sponsorship

Anyone interested supporting our study, we are seeking funding at different levels. If you wish to become a sponsor any funding organisation will receive a copy of the final research which will be published by Rutledge and a bespoke in-house presentation of our research findings including the investment survey results. If you wish to become a key sponsor we are also happy to discuss any bespoke research report of a selected topic that might be useful for your business.

Suggested sponsorship levels:

Key sponsors: £10,000

Other sponsors: £5,000

Thank you for considering this request. Please let us know if you need any additional information that may influence your decision to approve funding. You can contact me directly via email nicole.lux@city.ac.uk

This is a research initiative of academics and professionals from the University of Sao Paolo, University of Reading, UK and Cass Business School, City University London.

For more information see one of our previous posts and follow this blog and research news.

The team

Dr Claudia Murray, School of Real Estate & Planning University of Reading. In Buenos Aires Claudia worked for several architectural firms specialising in international architectural competitions at small and large scale. She was also a part-time lecturer at the Faculty of Architecture, Design and Urbanism (Universidad de Buenos Aires) until 1997 when she moved to London. After achieving several grants including the Visiting Arts Board and Arts and Humanities Research Council, she completed her postgraduate studies in King’s College London and joined the School of Real Estate & Planning in 2008.

Dr Nicole Lux Visiting Lecturer at Cass Business School, City University, London. She is also a member of the INREV Research Committee and the Association of Property Lenders. She has more than 15 years experience in real estate finance gained at large top-tier investment banks and financial service firms. Amongst others she has worked at Citigroup, Deutsche Bank and Moodys’ Investors Service negotiating real estate lending transactions across Europe. Her most recent book on Real Estate risk analysis has been published by Euromoney in 2012.

Professor Elaine Monetti, School of Civil Engineering at the University of São Paulo (USP). Eliane has 10 years experience in working for several private firms in the area project management and real estate development. In 1989 she joined the School of Civil Engineering (USP) as a full-time lecturer where she got her master and doctorate degree researching shopping centres. Besides teaching at undergraduate level she has also supervised many researchers at the Graduate Program in Civil Engineering. Eliane was one of the founders of the Real Estate Research Group at USP, the first one in Brazil focusing real estate matters.

Camilla Ween, Urbanist, Architect And Transport Planner and Director of Goldstein Ween Architects. She is a Harvard Loeb Fellow. She consults as an urbanist and transport planning professional with UK and overseas clients, and has recently been working with the Independent Transport Commission (on capturing additional benefits from high speed rail) and the Foresight Future Cities project. She writes extensively; her recent book Future Cities was published in 2014. She worked for Transport for London for 11 years advising the mayor on the impact of land use development and policy

It is perfectly acceptable to real estate managers and investors to discuss market risk or interest rates, but when it comes to credit risk and estimating economic capital most managers are out of their comfort zone. The biggest hole in that ground is produced by discussions on correlations, lack of data and in-transparency of the real estate sector.

It is not a reflection on the management, it is a simple manifestation of the disconnect that exist today between the real world and applied statistical modelling. And when it comes to banking regulation and economic capital for the banking industry, the disconnect is only growing larger.

“While regulatory capital model compensate for expected risk, economic capital should account for unexpected risk. The difference between two estimates is the amount you need to put aside for economic capital modelling.

I am an academic and experienced professional in real estate lending, deal execution, risk and recovery with 15 years experience in real estate finance transactions across capital structure, CMBS (UK/Germany) and VBA programming for structured finance. Experienced in working in multi-lingual and multi-cultural environments across Europe.

Following the financial crisis 2008 I have focused on finding solutions for distressed real estate bank loans and securitisations. Driven by the idea of improving industry underwriting and modelling standards I have published my first book with the title “Assessing real estate risk – applied models, concepts, methods”, Euromoney in October 2012.